Correlation Between PDD Holdings and Amazon
Can any of the company-specific risk be diversified away by investing in both PDD Holdings and Amazon at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PDD Holdings and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PDD Holdings and Amazon Inc, you can compare the effects of market volatilities on PDD Holdings and Amazon and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PDD Holdings with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDD Holdings and Amazon.
Diversification Opportunities for PDD Holdings and Amazon
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between PDD and Amazon is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and PDD Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PDD Holdings are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of PDD Holdings i.e., PDD Holdings and Amazon go up and down completely randomly.
Pair Corralation between PDD Holdings and Amazon
Considering the 90-day investment horizon PDD Holdings is expected to under-perform the Amazon. In addition to that, PDD Holdings is 1.38 times more volatile than Amazon Inc. It trades about -0.32 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.1 per unit of volatility. If you would invest 18,839 in Amazon Inc on August 27, 2024 and sell it today you would earn a total of 873.00 from holding Amazon Inc or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PDD Holdings vs. Amazon Inc
Performance |
| Timeline |
| PDD Holdings |
| Amazon Inc |
PDD Holdings and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PDD Holdings and Amazon
The main advantage of trading using opposite PDD Holdings and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PDD Holdings position performs unexpectedly, Amazon can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Amazon will offset losses from the drop in Amazon's long position.| PDD Holdings vs. Alibaba Group Holding | PDD Holdings vs. Sea | PDD Holdings vs. MercadoLibre | PDD Holdings vs. Vipshop Holdings Limited |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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